ACMA, ACCC okay Foxtel/Ten deal

The Australian Communications and Media Authority has confirmed it is satisfied, at this time, that the proposed arrangements between Foxtel Management Pty Ltd (Foxtel) and Ten Network Holdings Ltd (Ten) will not contravene the media diversity and control rules in the Broadcasting Services Act 1992 (the BSA), based on the information currently available to it.

“The principal issue considered by the ACMA was whether the arrangements would put Lachlan Murdoch in a position to exercise control of commercial television broadcasting licences held by Ten,” said ACMA chairman, Chris Chapman.

“If so, an ‘unacceptable 3-way control situation’ would result in the four licence areas where Mr Murdoch is already in a position to control the Nova commercial radio broadcasting licences and the News Corporation associated newspapers.

“However, the ACMA considered that, while Mr Murdoch was in a position to exert influence on Ten, that level of influence fell short of ‘control’ as prescribed by the BSA.”

The ACMA looked at the question of control under the BSA, both from:

• a “deemed control” perspective – whether on completion of the proposed arrangements, company interests in Ten controlled by Lachlan Murdoch would exceed 15 per cent thereby putting him in a position of “deemed” control of Ten; and• an “actual control” perspective – whether arrangements or relationships would put Murdoch himself, or together with an associate, in a position to control Ten.

It considered submissions and other relevant information provided either voluntarily or in response to a significant number of formal notices given under section 173 of the BSA.

On “deemed control”, it is clear on the information currently available to the ACMA that the company interests controlled by Murdoch in Ten through his private investment company and his traced company interests through Foxtel’s proposed shareholding in Ten would not exceed 15%.

On “actual control”, the ACMA considered the proposed arrangements between Foxtel and Ten, as well as Murdoch’s connections with Ten:

• through his private investment company• in his role as Non-Executive Co-Chairman of News Corporation• in his role as Executive Chairman of 21st Century Fox• through various potential “associate” relationships

The ACMA’s views are based on the information available at this time and the evidence before it. It will continue to monitor the relationship between Murdoch and Ten to ensure ongoing compliance with the diversity and media control rules.

Source: The ACMA

ACCC to not oppose Foxtel and Ten acquisitions

The Australian Competition and Consumer Commission has also announced that it will not oppose the proposed acquisitions by Foxtel Management Pty Ltd (Foxtel) and Ten Network Holdings Ltd (Ten).

The ACCC’s decision is limited to Foxtel’s proposal to acquire up to 15 per cent of Ten, Ten’s proposal to acquire a 24.99 per cent stake in Foxtel’s advertising agency Multi Channel Network (MCN), and Ten’s option to acquire 10 per cent of Presto (a joint venture between Foxtel and the Seven Network).

“While the acquisitions will lead to a greater alignment of Foxtel’s and Ten’s interests, and will increase the degree of influence Foxtel has over Ten, the ACCC considers that the proposed acquisitions, on their own, are unlikely to result in a substantial lessening of competition,” ACCC Chairman Rod Sims said.

“The ACCC has not found sufficient evidence to establish a link between these minority acquisitions and the competition concerns raised by market participants. We will, however, closely examine any future increases in these shareholdings, including where this is made possible through changes to the existing media diversity and control rules.”

In reaching its decision, the ACCC investigated whether the acquisitions would substantially reduce competition in the acquisition of sports rights and other types of content, with related effects in the free-to-air and broader television viewing markets.

“The ACCC considers the other free-to-air television networks, pay television providers and online service providers will continue to have sufficient alternatives to allow them to obtain content that is attractive to their viewers,” Sims said.

“Foxtel and Ten will continue to face competition from the remaining free-to-air networks, and streaming services are also likely to become increasingly important to the sale of sports rights.

“The ACCC took into account the anti-siphoning regime and considered that it reduced competition concerns with this transaction. With a near monopoly pay TV provider in Foxtel, the anti-siphoning regime could well currently have a positive effect on competition in the market for television viewing,” Sims said.

In relation to premium non-sport content, there is a large number of content producers competing to sell compelling content. In-house production by the major free-to-air television networks also plays an important role in the market.

In respect of advertising, the ACCC concluded that the MCN acquisition is likely to increase the incentives for Ten and Foxtel to offer bundled advertising packages across their platforms, and to integrate their advertising strategies, but that the acquisition itself will not lead to a substantial lessening of competition.

The ACCC has not, however, provided clearance for Ten’s agreement with MCN in relation to managing Ten’s advertising sales, which is not subject to the merger provisions of the Competition and Consumer Act 2010 (the Act).

“More broadly, any future regulatory reform should promote greater competition in the media industry. Existing regulations may no longer be effective, and may have unintended competition effects, as a result of technological developments that are reshaping the industry,” Sims said.

“For example, the ‘reach rule’ continues to limit a person from controlling television broadcasting licences that reach over 75 per cent of the population even while commercial free-to-air television networks are now able to stream their services nationally.”

Unlike most acquisitions reviewed by the ACCC which result in the target becoming a subsidiary of the acquirer, these acquisitions do not result in the merger parties becoming related parties, and so any arrangements between them are subject to the competition provisions of the Act. While noting the dynamic nature of this market, the ACCC will look closely at the effect of current and future arrangements between Foxtel and Ten which may raise competition concerns, including the MCN agreement.

A Public Competition Assessment will be published in due course.

Source: ACCC

Foxtel welcomes decisions to approve investment

Foxtel CEO Richard Freudenstein has welcomed the decision of the ACCC and the ACMA not to oppose the transactions that will see Foxtel acquire up to 15% of the shares in the Ten Network and the Ten Network purchase a 24.9% interest in MCN.

“These transactions will provide much needed capital for Ten and help it to grow revenues by building scale and enhancing services to clients by working with MCN,” said Freudenstein.

“A stronger Ten will further enhance competition in an increasingly competitive local and international media industry.

“The sales representation agreement, by which MCN is selling advertising for Ten, came into effect on 1 September. The teams are now integrated and working well to create better outcomes for clients of both Ten and Foxtel,” said Freudenstein.

The proposed transaction remains subject to certain conditions and regulatory approvals, including by the FIRB.

Source: Foxtel

Ten Network welcomes ACMA and ACCC findings

Ten Network Holdings Limited has also welcomed the Australian Competition and Consumer Commission’s (“ACCC”) decision not to oppose the proposed transactions between TEN, Foxtel Management Pty Limited, as agent for the Foxtel Partnership (“Foxtel”), and Multi Channel Network Pty Ltd (“MCN”). It also welcomed confirmation from the Australian Communications and Media Authority (ACMA) that the proposed transaction would not give rise to a breach of the so called 2 out of 3 rule.

The proposed transactions will enable Ten to reduce debt and provide additional financial flexibility to continue its strong ratings momentum.

Ten non-executive chairman David Gordon said: “We are very pleased to receive clearance from the ACCC and the ACMA for the proposed transactions.

“The approval from the ACCC and the ACMA represents another important step for Ten to conclude the strategic review process initiated by the Board last year.

“By entering into the transaction with Foxtel and completing our proposed entitlement offer to all Ten shareholders, Ten will receive the capital it needs to continue its turnaround. Through the arrangements with MCN, our advertising clients will receive the benefit of new efficiencies, improved data capability and broader integration opportunities,” Gordon said.

The proposed transaction still remains subject to certain conditions and other regulatory approvals, including from the Foreign Investment Review Board.